A Look at Two Blues’ Distinct Approaches to Changing the Healthcare Model

The insurers illustrate the very different ways that payer-provider partnerships are emerging as a key driver of market improvements.

May 16—Two dominant not-for-profit health plans—both Blue Cross insurers—are moving aggressively in very different directions.

Both value-based payment and retailing have become dominant market trends in recent years. And the two Blues plans recently described their approaches in those areas.

Given his background in leading value-based payment initiatives for the federal government, it may come as little surprise that Patrick Conway, CEO of Blue Cross and Blue Shield of North Carolina (BCBSNC), has aggressively pursued moving that company into such payment models. Conway formerly served as the director of the Center for Medicare & Medicaid Innovation, which constructs Medicare value-based payment models.

Conway echoed the goals of his former federal employers by recently announcing he planned to move more than 50 percent of the company’s payments into advanced alternative payment models (APMs)—including those with downside risk—within the next two years. As secretary of the Department of Health and Human Services during the Obama administration, Sylvia Burwell expressed a goal of moving half of all Medicare payments to value-based care models by the end of 2018.

“That’s the discussion we’re having with providers right now about partnerships to shift how you pay for and deliver care,” Conway said at a recent Washington, D.C., briefing by the National Institute for Health Care Management (NIHCM) Foundation.

The insurer, which offers accountable care organizations, bundled payments, and advanced primary care medical homes, seeks to accelerate its move to value through partnerships. For instance, it aims to improve primary care through partnerships that allow 24-hour access, with care that is “telehealth enabled,” he said.

The insurer’s population health initiatives also include other types of partnerships, such as those with companies that aim to improve health outcomes for—and even cure—patients with diabetes.

One of the newest partnerships the insurer has begun to explore is with drugmakers. Such an approach could include targeting Hepatitis C, Conway said, with the idea that “We want to treat everyone, or everyone we can find, with Hep C, and we’re willing to pay for that at a population level to try to eradicate—or come as close to eradicating as possible—Hep C at a state level,” Conway said.

Conway credited the insurer’s value-based pay shift with savings thus far of 52 percent in inpatient hospital costs, 48 percent in outpatient costs, and 14 percent in emergency department (ED) costs.

“And now the question is, how do you take that to the next level,” Conway said.

Like most payers, BCBSNC has found that it invests less than 10 percent in primary care but that primary care influences 80 percent of costs. To improve outcomes in that area, the insurer aims to more tightly integrate mental and behavioral health “both financially and from a care delivery model [perspective],” he said.

A Retail Focus

Conversely, Florida Blue has embraced a retail model as its market has shifted.

“When we look at things like Medicare [Advantage], Medicaid, and the Affordable Care Act [ACA], our membership today has dramatically moved to a retail-purchased membership in our business plan,” said Patrick Geraghty, CEO of Florida Blue and GuideWell.

Individual purchases of insurance plans now comprise more than half of the insurer’s revenue, he said. “So, we are very much in the retail business, which changes the way you think about your customer.”

The approach includes both high-tech and “low-tech” approaches. For instance, the insurer funds assisters to go to the homes of its Medicare Advantage enrollees to look for tripping hazards, like shag carpets or a lack of handrails, to prevent the falls that may precede rapid health declines in that population.

“That is very low-tech but goes a long, long way to keeping people healthy in the first place,” Geraghty said.

The company also has sought to fill what it viewed as a void of entities that aim to keep people healthy, as opposed to helping the sick get care.

The company has opened 21 retail centers to provide ongoing “personalized service” for its enrollees. When some in the media questioned whether such help could be more cost-effective if provided online, Geraghty noted that even Apple has needed retail stores.

“What about health care makes it actually something that these centers work for? [It’s] complex, personal, expensive, and people want to talk to people,” Geraghty said.

Among services that the retail centers offer are health risk assessments, clinician visits, and tailored health and wellness programs. The centers also offer senior seminars and nutrition seminars, and they rent space to community-based charitable groups.

The retail approach followed findings from the pre-ACA health insurance marketplace in Massachusetts, where shoppers would not buy services online until they went offline and got advice, he said.

The company views the traffic that the stores generate (350,000 unique customer visits in 2017) and customer satisfaction rates (92 percent) as signs of their success.

Crossover Efforts

There are numerous areas where the two insurers’ distinct efforts overlap.

For instance, BCBSNC has moved to provide online transparency data on costs and quality for 1,400 procedures. Such data is seen as key for a retail healthcare system to function.

“We fundamentally believe that we have to get data to consumers, to providers, and we have to view data transparency as a resource,” Conway said.

And Florida Blue has aggressively moved to improve the value offered by Florida providers by establishing its own care delivery operations. For instance, the insurer launched three urgent care clinics, including one across the street from a hospital ED with unusually high admission rates, Geraghty said.

“We started taking patients from the hospital, and the hospital had to change the way they were doing business,” Geraghty said. “We’ve changed the whole level in that marketplace by putting competition in place.”

Similarly, the insurer partnered with South American insurer Sanitas to build healthcare facilities in the costly South Florida marketplace. In the two years since those facilities opened, they have had 190,000 patients. The effect has been to push other providers in the area to become more efficient, drive costs down, and improve customer satisfaction, Geraghty said.

“It’s not just about competition among health plans; it’s about competition in the delivery system,” Geraghty said. “If you go across the United States and look at places where there is a dominant hospital that bought the medical facilities around them, they have the highest healthcare costs in the country. Competition in the delivery space actually drives just the opposite.”

Rich Daly is a senior writer/editor in HFMA’s Washington, D.C., office. Follow Rich on Twitter: @rdalyhealthcare